Question

The minimum feasible​ long-run average cost for firms in a perfectly competitive industry is ​$27 per unit. If every firm in the industry currently is producing an output consistent with a​ long-run equilibrium, calculate the marginal cost incurred by each firm and the market price. Marginal cost is ​$nothing and market price is ​$nothing. ​(Enter your responses as whole​ numbers.)

Answer 1

Answer: Marginal cost is ​$27 and market price is ​$27

Explanation:

In the long run, perfectly competitive industries make zero economic profit. This means therefore that Average cost will be the same as the Market price so Market price will be $27.

Firms in a perfectly competitive industry will produce at a rate where Marginal revenue will equal marginal cost in order to maximise profit.

In a perfectly competitive industry, firms are price takers which means that the Market price is also the same as the Marginal revenue. The Market price will therefore be equal to marginal cost which means that Marginal cost will also be $27.